- Buyout
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A buyout, in finance, is an investment transaction by which the ownership equity of a company, or a majority share of the stock of the company is acquired. The acquiror thereby "buys out" control of the target company.
A buyout can take the form of a leveraged buyout, a venture capital buyout or a management buyout. Where the company being bought out is a public company, a buyout is often called a "going private" transaction.
Non-corporate usage
The term may apply more generally to the purchase by one party of all of the rights of another party with respect to an ongoing transaction between the two. For example:
- an employer may "buy out" an employee's contract by making a single prepayment, so as to have no ongoing obligation to employ the person;
- a landlord may buy out the remainder of a tenant's lease, effectively paying them to vacate.
Contracts may have an explicit buyout provision setting forth the terms or price. In the alternative the matter may be negotiated by the parties. If the entire operation is not purchased, the remainder is referred to as a stub.
See also
- Management buyout
- Leveraged buyout
- Employee buyout
- Stub (stock)
- Envy ratio
Corporate finance and investment banking Capital structure Transactions
(terms / conditions)Initial public offering (IPO) · Secondary market offering (SEO) · Follow-on offering · Rights issue · Private placement · Spin out · Equity carve-out · Greenshoe (Reverse) · Book building · Bookrunner · UnderwriterValuation Financial modeling · Free cash flow · Business valuation · Fairness opinion · Stock valuation · APV · DCF · Net present value (NPV) · Cost of capital (Weighted average) · Comparable company analysis · Accretion/dilution analysis · Enterprise value · Tax shield · Minority interest · Associate company · EVA · MVA · Terminal value · Real options valuationCategories:- Corporate finance
- Stock market
- Economics and finance stubs
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